Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 1
"No - I wouldn't do that. So are you saying a 4% SWR is wrong. Then what is correct?"

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

typically, you'd figure that you'd put spending needs - then wants - then
maybe dream spending together in a budget. After that you'd have three or
more spending estimates that would indicate what range of spending you might
actually need.
This approach aims you toward what you might need to accumulate - I have to accumulate X
in order to have Y. The 4% approach is pointed the other direction - i.e.
what can I spend, Y if I have saved X.
Both approaches have a place in planning - and both have errors which can
influence life after FRA.

Howie52
And both end up having to assume inflation and rates of return - which introduce
other errors.
In passing, I have found my initial estimates of spending following a lay-off
were not correct. The estimates for "needs" were higher than actual spending.
The estimate for wants appear to be more on target. This is a "good" error to
my perspective.
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.